The employer super contribution tax rate in Australia is a flat 15%, applied inside your super fund to every dollar your employer contributes on your behalf. That covers your compulsory Superannuation Guarantee payments and any salary sacrifice you’ve arranged. Two adjustments sit on top of the flat rate: if your combined income and contributions exceed $250,000, an extra 15% Division 293 tax lifts the effective rate to 30%; if you earn $37,000 or less, the Low Income Super Tax Offset effectively returns the 15% back into your fund.
What Gets Taxed at 15%
Employer contributions are classed as concessional contributions because they’re paid from pre-tax income. The fund applies a flat 15% tax to concessional contributions as they arrive.1Australian Taxation Office. Understanding Concessional and Non-concessional Contributions This includes the Superannuation Guarantee, salary sacrifice, and any personal contributions you claim as a deduction on your tax return.
From 1 July 2025, the Superannuation Guarantee rate is 12% of your ordinary time earnings, and it stays at 12% for 2026-27 and beyond.2Australian Taxation Office. Super Guarantee Some employers pay more than the minimum, and the extra amount is treated the same way for tax purposes: 15% off the top inside the fund.
If your marginal tax rate is 30% or higher, the 15% rate on contributions is roughly half what the same money would be taxed at as wages. The fund handles the tax by deducting it from your balance after receiving the deposit, and it shows up on your annual statement as contributions tax or similar. You don’t do anything at tax time for standard contributions inside the cap.
Non-concessional contributions sit outside this. Those are payments from money you’ve already paid income tax on, so they enter the fund tax-free. The 15% rate applies only to the before-tax stream.
The Annual Cap on Concessional Contributions
There is a ceiling on how much can go in at the 15% rate each year. For 2025-26 the cap is $30,000. From 1 July 2026 it rises to $32,500 through indexation.3Australian Taxation Office. Contributions Caps The cap applies at any age and covers SG, salary sacrifice, and deductible personal contributions combined.
Going over the cap changes the treatment. The excess amount is added to your assessable income and taxed at your marginal rate. To stop the same dollars being taxed twice, the ATO applies a 15% non-refundable offset against the extra liability, so the excess ends up taxed roughly as if it had been paid to you as salary.
You can also elect to withdraw up to 85% of the excess from your fund to help cover the tax. The election must be made within 60 days of the ATO’s determination, and once lodged it cannot be reversed.4Australian Taxation Office. Concessional Contributions Cap Release the full 85% and those amounts won’t count against your separate non-concessional cap. Release less, and part of the excess may be reclassified as non-concessional, which can create a second problem if you’re near that cap.
Unused cap amounts can be carried forward for up to five years if your total super balance was below $500,000 at 30 June of the previous financial year. Carried-forward contributions still get taxed at 15%. The ATO applies the carry-forward automatically when your return is processed.
Division 293 Tax for High Earners
If your combined income and concessional contributions exceed $250,000 in a financial year, an additional 15% tax called Division 293 applies. It’s levied on the lesser of your concessional contributions or the amount by which you exceed the threshold, taking the effective rate on those contributions to 30%.5Australian Taxation Office. Division 293 Tax on Concessional Contributions by High-Income Earners
The income figure isn’t just taxable income. The ATO adds back reportable fringe benefits, net financial investment losses, and net rental property losses. Someone with taxable income of $220,000 can still cross the threshold once those items and their super contributions are counted. A one-off capital gain can also push you over the line in a single year even if your regular salary sits well below $250,000.
The ATO issues a separate Division 293 assessment after matching your return against fund data. You can pay from personal funds or elect to have the liability released from your super balance. At 30%, the effective rate is still below the 45% top marginal rate, so concessional contributions remain tax-advantaged for high earners; the margin is just smaller.
Low Income Super Tax Offset
If you earn $37,000 or less, the Low Income Super Tax Offset (LISTO) effectively refunds the 15% contributions tax. The government pays 15% of your concessional contributions directly into your super fund, up to $500 a year, with a minimum payment of $10.6Australian Taxation Office. Low Income Super Tax Offset
The reasoning is straightforward. If your marginal rate is 15% or lower, the standard contributions tax gives you no real concession, and directing money into super would leave you worse off than taking it as wages. The ATO calculates eligibility automatically from your adjusted taxable income and pays the offset straight to your fund rather than as a cash refund.
From 1 July 2027, the LISTO threshold rises to $45,000 and the maximum payment increases to $810.7Treasury.gov.au. Low Income Superannuation Tax Offset The changes are designed to align with the top of the second income tax bracket and account for recent SG rate rises.
How the Tax Gets Paid
For the standard 15% contributions tax, your employer sends the full contribution to the fund without withholding anything. The fund then deducts the tax from your account when it processes the contribution. Nothing is required from you at tax time for contributions inside the cap.
Division 293 tax and excess concessional contribution tax are handled by the ATO after the financial year ends, through separate notices of assessment. You can pay from personal funds or request a release from your super balance, with the excess-contribution release capped at 85% and the 60-day election window described above.
Salary Sacrifice Setup
If you’re arranging salary sacrifice, it has to be set up before the work is performed. You cannot redirect pay you’ve already earned. The ATO requires a written agreement between you and your employer setting out the terms.8Australian Taxation Office. How to Set Up Salary Sacrifice for Super Without proper documentation, the ATO can reclassify the contributions as ordinary income, which removes the tax advantage. Sacrificed amounts count toward your concessional cap alongside SG payments, so track the combined total across the year.